Wireless telecommunications providers are interested in the pre-paid business, because it negates the need to send a bill or perform any credit check and provides for payment in advance. “Pre-paid cellular” is especially popular in Europe where it represents 70% to 80% of the market. This translates into over twenty million pre-paid phones in the Great Britain alone. There are three current methods of recharging or replenishing pre-paid phone charges or “topping-up” as it is sometimes called. In a first method, a so-called “scratch card” is purchased from a merchant, such as a news agent or other retailer, and the back of the card is scratched off to reveal a number. When the number is keyed into the pre-paid phone, the minutes purchased are activated and the subscriber can make calls. The cards may be at as much as a 20–30% discount, wherein $100 worth of minutes is sold to the retailer for $70 to $80.
In a second method, a card referred to as an “electronic swipe card” is issued by the mobile operator that can be recharged or replenished at a participating retailer's store. A subscriber can use this card to replenish the mobile phone prepaid charges any time provided there is sufficient credit available. In a third method, referred to as “credit/debit card replenishment”, a subscriber types in the subscriber's credit/debit card number into the mobile phone or a web site, and the subscriber's card account is debited appropriately. This method requires pre-registration. The first method is by far the most popular but by far the most expensive for the operator, with as much as a 20% to 30% discount to retailers. On the other hand, the third method is potentially the cheapest for the mobile phone operator, but that method also carries the largest risk of fraud. Many mobile phone operators have sought a low risk solution to the third method. However, a serious problem in accepting credit/debit card payments is the need to confirm the identity the pre-paid subscriber, which means that the legitimacy of the card cannot be confirmed without exhaustive and expensive checks.